The Richest Man on Earth

Posted
Friday, March 15, 2013 8:21 am

As the white smoke clears, the world's first Argentine was appointed to the pinnacle of the Roman Catholic Church. Pope Francis I, formerly known as Cardinal Jorge Mario Bergoglio, assumed the reigns of what many believe is the wealthiest instituition on earth and since he is the boss that makes him one wealthy individual.

At the helm of this financial behemoth representing 3,000 dioceses and 1.2 billion Catholics worldwide, is a 76-year-old man who likes to be called "Father Jorge", who takes the subway and prefers to dress in clerical black, rather than the rich red of his fellow Cardinals. He is a man who rejected the palatial digs of his predecessors as Archbishop of Buenos Aires, opting instead to live in a small apartment where he cooked his own meals.

Francis I is responsible for untold billions in assets that range from priceless art works to real estate holdings that are so large they rival the size of many small countries. No one knows for sure how much the Catholic Church is worth although over the years various media organizations and research centers have made a stab at estimating portions of the net worth of this 2,000 year old religious order.

For example, back in 2010, The Economist estimated that the church and organizations owned by them in just the United States was spending roughly $179 billion a year. They estimated that the 34 metropolitan provinces managed by 270 bishops spent 57% of that money in health care networks, 28% went to colleges while parish and diocesan operations (of which there are 196) accounted for only 6%. It might surprise some to know that charitable donations only accounted for 2.7%.

The church employs 2,800 lay workers worldwide, which isn't much considering the number of Catholics out there. Pope Francis's new digs, Vatican City, alone, accounts for 1,900 of these workers. Given that the Vatican is officially a city state; its employees are responsible for issuing its own passports, license plates, postal service as well as the administration of a host of offices and buildings, including its own hospital. Much of that infrastructure has outgrown the confines of the world's smallest country and has sprawled throughout Rome's urban landscape.

If we confine our discussion to just the assets the Vatican owns, we know that its portfolio includes billions in property across Europe. Included in the portfolio are buildings in London, Paris and Switzerland. Then there are the landmarks in Rome, which draw 5 million tourists a year such as the Apostolic Palace (the pope's official residence) the Sistine Chapel (with its murals by Botticelli and Michelangelo) and St. Peter's Basilica, the largest church in the world. You could combine Disney Land, Disney World and a couple more such attractions and you wouldn't come close to the worth of those historical spiritual shrines in the middle of some of the highest priced real estate in Europe.

There are estimates that world-wide the Church owns roughly 716,000 square miles of real estate--about the size of Alberta, Canada-- which includes churches, cathedrals, monasteries, schools and convents among other properties. Its bank, called the Institute for Works of Religion, (IOR), is estimated to be worth $8-10 billion and has investments in multiple corporations ranging from finance, insurance, chemicals, steel, construction and real estate.

It is thought that the Vatican holds a mountain in gold worth several billion dollars. The real money, however, is tied up in artwork and other irreplaceable religious relics. They are both practically impossible to categorize and even more difficult to price, since the Church would never sell these objects.

Yet, despite its wealth, the Catholic Church has been cash-flow poor for several years. Scandal and mismanagement has cost this colossal non-profit an enormous sum. The abuse scandals have drained the church of well over $3.3 billion to date. That number is expected to grow as more cases are decided in favor of the plaintiffs. For an organization that receives $170 billion annually in revenues, a couple billion might seem like small change; but many of the settlements have been made by individual dioceses and religious orders, which are not nearly as wealthy as the Church overall. Eight U.S. dioceses have already declared bankruptcy as a result of these settlements and more of the country's 196 dioceses could wind up in similar straits.

The Vatican Bank, itself, has also been the subject to repeated multi-million dollar scandals ranging from money laundering, to mismanagement and the lack of financial controls. So don't envy the new Pope too much. Francis I has his work cut out for him and I suspect he will have precious little time to enjoy his status as the wealthiest guy on earth.

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